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How Cheap is Too Cheap?

If bike shops want to compete for the bulk of the US market, they need cheaper bikes.

Right now, the IBD channel sells about 20% of the units, mass channel 80%.

Does your store want some of that action? Here’s a Facebook debate (edited for space) between my esteemed colleague John Schubert and me last month:

Schubert: You inspire a radical question: could the industry come up with an IBD bike to split the price difference between a Kmart bike and the entry price bike at bike shops? Most bike shops wouldn't want it. But a few would. And then you have the cost-conscious customer "in the system."

Keener: The four problems with the "split the difference" bike: (1) It wouldn't be profitable for IBDs. (2) It would be mechanically "the bottom of the barrel." There would be straws drawn among the mechanics, loser builds the cheap ones. (3) The under-$200 bike buyer would need to be lured back, "Hey, we have cheap bikes now! $179!" And how many shops want that as their message? (4) Take a look at a $179 mass bike. Bristling with bells and whistles. They're bad bells and whistles, but still. Our "plain Jane" IBD bike wouldn't stack up.

Schubert: The 'split the difference' bike might work for some retailers. I have met customers in the Wal*Mart price range who know a little bit about quality, and who would use the bike to go farther afield if the bike would cooperate. Many of us have long believed that, for someone entering cycling, the first rung on the ladder is on a one-rung ladder -- the discount store chain. The independent bike shop ladder is missing one or two rungs at the bottom, so the customer has to be willing to go all the way to the third rung just to get started.

Keener: I realize there's that long-held belief. I don't see any evidence for it. I believe that consumers will spend what they need to spend to have the biking experience they want. When they are ready to ride farther and faster, they will spend more. When they're riding a mile or two at single-digit speeds with their kids, $79.95 will do nicely.

Now, even better than two old guys sparring, we have an experiment!

While shooting Selling Cycling videos last night, I stumbled (literally, at 2:15 AM) over this line of Mantis kid’s bikes at Bicycle Village in Boulder.

These bikes come from Nile Nims’ Cycle Force Group, and are also sold at Target, Wal*Mart, Dick’s, Sports Authority, et al.

$169.95 is within hailing range of the prices across the street at Target, and of course you get all the shop services and expertise that goes with an IBD purchase.

Here’s what the Bicycle Village folks have to say about their experiment: “Our overall goal is to get more people on bicycles, and make it a good experience,” said bike buyer Jon Jeunette.

“We’ve decided to offer some price-point models to hopefully draw some of the mass consumers back to the IBD channel. If we get these consumers in the door, show them great customer service, our same-day service, and our kid’s trade program, we’ll have a bunch of new customers for life,” Jeunette concluded.

Which may or may not mean a whit to the “I just want a bike for my kid, how much?” shopper.

I salute Bicycle Village for trying something different to attract more riders to the Big Leagues. I’ll report back after the Holidays on how it works for them!